By Eyk Henning
FRANKFURT--Deutsche Bank AG's incoming co-Chief Executive John
Cryan on Wednesday postponed a detailed presentation of the giant
German lender's new strategy until the end of October but said he
remains committed to trimming operations.
In a letter to staff posted on the bank's website, he said: "I
am not going to tell you that all will be sweetness and light in
the coming months," setting the stage for potentially deep cuts
among staff and an increased focus on changing the business's
corporate culture.
The former UBS finance chief starts Wednesday as co-CEO
alongside Jürgen Fitschen. He replaces Anshu Jain who stepped down
last month amid criticism from regulators and investors. Mr. Jain's
departure was first reported by The Wall Street Journal.
Mr. Cryan on Wednesday stressed his commitment to the
cornerstones of the strategy 2020, which includes shedding its
Postbank AG retail banking business but said he would take the
summer and fall to work out how to cut costs and other details of
the new strategy. The presentation was previously slated to happen
by the end of this month.
Deutsche Bank has trailed rivals in terms of profitability and
share price since Mr. Jain and Mr. Fitschen took over at the helm
in mid-2012 as they grappled with a series of costly lawsuits and
attempted to lower costs.
Addressing staff on his first day on the job, Mr. Cryan conceded
that the reputation of Germany's largest lender has been "damaged
by instances of serious misconduct." The resulting heavy fines for
settling lawsuits "have strained our capital...and will likely
continue to do so for some time," he said.
Deutsche Bank has shelled out around EUR9 billion ($10.04
billion) over the past three years to settle lawsuits and
regulatory investigations, most of which stem from the investment
bank Mr. Jain once ran. Deutsche Bank paid a record $2.5 billion
fine to settle U.K. and U.S. investigations into the manipulation
of the London interbank offered rates, or Libor.
One of Mr. Cryan's top tasks will be to mitigate the bank's
contentious relations with regulators. A person familiar with
conversations between Deutsche Bank and the German banking
regulator BaFin said the agency has been critical of Mr. Jain,
pointing to a recent confidential report on attempts by Deutsche
Bank traders to manipulate Libor. Although the report said no
executives were involved in the scandal, BaFin noted that Mr. Jain
was head of the investment bank and therefore "ultimately
responsible for the missteps in the eyes of BaFin," the Journal
reported previously.
Deutsche Bank officials have said repeatedly that there was no
pressure from regulators on Mr. Jain to step down. BaFin's top
supervisor Felix Hufeld on Monday declined to say if the watchdog
pressure Mr. Jain to leave. Asked how BaFin encourages a management
change in general, Mr. Hufeld said it "informally communicates
[that to a bank]. And then we wait and see what happens."
He also said BaFin wished Mr. Cryan well, adding that Deutsche
Bank has to improve its internal processes and culture.
At the bank's recent annual meeting Mr. Jain and Mr. Fitschen
received what amounted to a vote of no-confidence from
investors.
Following news of Mr. Jain's departure, supervisory board
chairman Paul Achleitner told The Wall Street Journal that the move
"to restructure the bank and the management were the logical
consequence of the new strategy previously announced." He said "the
understanding that a change at the top is necessary didn't come all
of a sudden but has...emerged [over time]."
Mr. Cryan is now hoping to open a new chapter for Deutsche Bank.
Another priority is making deep cost cuts to close the bank's
profitability gap with rivals. Mr. Cryan, 54, is expected to
accelerate the EUR3.5 billion ($3.9 billion) in cost cuts the bank
has said it wanted to achieve by 2020.
The Briton has a reputation for trimming costs. At UBS, the
overhaul he orchestrated brought down operating costs to 22.4
billion Swiss francs ($23.8 billion) in 2011 from 28.6 billion
francs in 2008, mainly by cutting back on fixed-income trading that
lacked the scale of large rivals, including Deutsche Bank. At the
same time, head count at UBS fell by roughly 17% to 64,820.
Hans Bentzien
contributed to this article.
Write to Eyk Henning at eyk.henning@wsj.com and Sarah Sloat at
sarah.sloat@wsj.com
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